By Sara Danzeo and Elena Mayer-Besting
BANGKOK, Thailand, Feb 6 2024 (IPS)
In the bustling financial hub of Singapore, Rhea See, an early-stage fund manager, leads an accelerator platform dedicated to empowering women in technology.
She firmly believes that investing in women transcends the conventional paradigm of merely ‘doing good.’ For Rhea, it represents a strategic move towards smart economics and game-changing innovation.
“Many still view investing in women as a niche, impact-only endeavor and I want to shatter this stigma. Investing in women is not just about doing good, but it’s about smart economics and game-changing innovation; it’s about unlocking untapped potential and driving technological advancement and profitable returns,” shares Rhea.
As of July 2023, women accounted for only 17 per cent of all decision-makers at venture investors headquartered in South-East Asia. About 67 per cent (vs. 77 per cent in 2022) of regional investors do not have a woman in an investment decision-making role.
Evidence shows that diversity in venture capital firms not only fosters creativity and alternative viewpoints but also positively impacts financial performance. A study by Paul Gompers, a professor at Harvard Business School, found that venture capital firms with more diversity among their partners tend to be more profitable.
The study revealed that firms with at least one female partner saw improved financial performance, with returns increasing by approximately 10 per cent. This translates into a significant economic impact, as the median venture capital fund return moves from around 14 – 15 per cent to 16 – 17 per cent with the inclusion of female partners.
Additionally, having women as partners increased the success rate of startups supported by these firms. This research suggests that gender diversity generates alternative perspectives that can uncover new investment opportunities and help avoid blind spots
Starting a fund is no small feat. It requires a commitment of at least 15 years, a factor that might deter many. Additionally, the venture capital industry, particularly for women-led funds, embodies a complex mix of long-term relationship building, navigating biases and strategic networking.
Considering the demanding nature of the role and the need for substantial family support and background education, this may present significant obstacles for women in the Asia-Pacific region, who are traditionally considered the main caretakers in the family.
Women-led funds raised less than 2 per cent of the $166 billion raised by venture firms globally in 2022, indicating the significant gap that still exists.
Acknowledging the unconscious bias and additional hurdles that women fund managers face in the region to raise funds, 2X Global with the support of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) under the Catalyzing Women’s Entrepreneurship Programme, supported by Global Affairs Canada, together with Australian Aid, launched an introductory and acceleration programme for female-led or gender-balanced fund managers with gender smart investing strategies across the Asia-Pacific region.
The 2XI GP Sprint, which began in September 2023, is providing tailored coaching, practical exercises and network facilitation for GPs with the aim of accelerating their progress towards achieving their first close.
In November 2023, in Singapore, selected participants of the GP Sprint presented their investment thesis to LPs. During the presentations, the determination, qualifications and expertise of these women from the region were showcased.
These women are not just poised to become exceptional wealth managers; their investment theses, often environmentally and socially conscious, suggest a transformative impact on the region through strategic capital allocation.
The involvement of women in the investment field is more than a matter of equity; it makes business sense, while emerging as a strategic necessity for the sustainable and holistic growth of the investment landscape.
The Catalyzing Women Entrepreneurship programme by ESCAP has forged strategic partnerships with organizations such as 2X Global to empower female capital allocators and pave the way for a more inclusive and prosperous future in the Asia-Pacific investment landscape.
Sara Danzeo is Partnerships Specialist, Trade, Investment and Innovation Division, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)
Elena Mayer-Besting is Programme Management Officer, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)
IPS UN Bureau